Providing for Consideration of H.R. 2289, Commodity End-User Relief Act

Floor Speech

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Mr. McGOVERN. I thank the gentleman from Washington (Mr. Newhouse) for the customary 30 minutes.

Mr. Speaker, I rise in strong opposition to this rule and to the underlying legislation.

Since my friends on the other side of the aisle have assumed the majority, they have made it their mission to undermine the Dodd-Frank Act and hamstring the ability of our regulators to put in place strong rules to prevent another financial crisis, and this legislation is no exception.

H.R. 2289 reauthorizes the Commodity Futures Trading Commission through 2019 while making substantial changes to the CFTC's internal operations and rolling back key Dodd-Frank provisions intended to strengthen our financial regulatory framework.

I have specific concerns with the new cost-benefit requirements imposed in title II of the legislation. The CFTC already conducts cost-benefit analyses on its rulemakings, and this provision could significantly slow down the rulemaking process while also creating openings that will put the CFTC at the risk of increased litigation.

Title II of H.R. 2289 also proposes several unnecessary changes to the Commission's internal operations that can make it more difficult to manage the agency.

According to CFTC Chairman Massad, the provisions contained in title II could weaken the Commission's ability to respond in a timely and effective manner. For example, if these measures were currently in place, it would have made it more difficult for the agency to positively respond over the past 10 months to concerns raised by market participants. Also included in this bill are substantial changes to rulemakings taking place at the Commission under the Dodd-Frank Act.

I am particularly concerned by the cross-border language contained in the bill, which will undercut the efforts already underway by the Commission to negotiate on an international system of safe and robust derivative rules that are necessary to apply to the global derivatives market.

H.R. 2289 requires the CFTC to create a rule that will automatically allow U.S. banks and foreign banks conducting business in the U.S. to do so under the rules imposed by foreign jurisdictions, all of which are currently more lenient than our own. We have seen this kind of race to the bottom before, and we all know how it ends.

Worse yet, Mr. Speaker, is that this legislation hamstrings an agency that is already woefully underfunded. The Congressional Budget Office estimates that the CFTC will need 30 additional personnel annually to handle the increased workload imposed by both the new cost-benefit analysis requirements and the mandated cross-border rule contained in this legislation.

Will my friends on the other side of the aisle provide the necessary funding increases to the CFTC to carry out these requirements? I doubt it.

Dodd-Frank significantly expanded the CFTC's role in overseeing our financial markets, and they have already completed over 80 percent of their required rulemakings, the best rate of any financial regulator. They have done so despite the fact that Congress has not done its part to provide the agency with the resources it needs to police these incredibly complex markets, populated by highly sophisticated and extremely powerful entities.

Remember AIG, the insurer brought down by derivatives trades that the CFTC is now policing? If that memory is fuzzy, I am sure you will remember the funds we provided to bail AIG out, which came to a total of $67.8 billion. That would be enough to fund the CFTC at the level requested in the President's budget for over 200 years.

The Commission needs a reauthorization, but it certainly doesn't need one saddled with changes that will hamstring its internal operations, prolong its rulemakings through an inflexible cost-benefit analysis requirement that opens it up to litigation risk, and force it to allow a race to the bottom on international rules governing a global market.

I ask my colleagues to join me in opposing the rule and the underlying legislation, and I reserve the balance of my time.

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Mr. McGOVERN. I yield myself such time as I may consume.

Mr. Speaker, I just want to point out to my colleague from Washington State with regard to the funding of the CFTC that the agency has never received the funding that it has requested, and that is just a fact. Here we are imposing new requirements, new mandates. CBO, as I mentioned in my opening, estimates that the CFTC will need an additional 30 personnel annually to handle the increased workload imposed by the new cost-benefit analysis requirements of the mandated cross-border rule contained in the provisions in this bill, and so we are asking an agency that has never been properly funded to even do more and not provide it with the proper funding. I don't think that is a smart way to move forward when it comes to an issue so important.

I also want to point out to my colleagues that they should have received a letter from the Consumer Federation of America strongly opposing this bill. Let me just read you the first paragraph. It says:

We are writing on behalf of the Consumer Federation of America to ask you to oppose H.R. 2289, which the House is expected to vote on this month. This legislation would hamstring the Commodity Futures Trading Commission from effectively overseeing and regulating commodities and derivatives markets, leaving consumers exposed to fraud, manipulation, and abusive practices, and putting the safety and stability of the U.S. financial system at risk. The language in this bill largely mirrors the language offered in last year's CFTC reauthorization bill, which the Obama administration strongly opposed because it undermined the efficient functioning of the CFTC and offered no solution to address the persistent inadequacy of the agency's funding. We urge you to resist this relentless attack on the CFTC by voting against this misguided and harmful legislation.

I would tell my colleagues who are observing this debate that each one of them received a copy of this letter from the Consumer Federation of America strongly opposing this bill.

Mr. Speaker, I include the statement for the Record.

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Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

I just want to be clear on one thing. Yes, this is an authorization bill. It is not an appropriations bill. But the issue of funding for the CFTC is relevant in the discussion of this authorization bill because we are essentially proposing that we give additional responsibilities or require additional actions from the CFTC with no guarantee that we are going to provide the resources for them to do their job. We haven't provided them the adequate resources to do what they have been expected to do from the very beginning.

I also want to say that most end user relief in this bill is not objectionable, but the CFTC is already addressing them through rulemaking. A better way to address these concerns than in statute would be more flexibility for them to do rulemaking, which can be adjusted.

In addition to end user provisions, this bill also contains all the problems that we have already identified with regard to cost benefit and cross border. So there are some significant issues here.

The DelBene amendment was mentioned earlier. I want to make it clear that that does not prevent litigation. It just restates the standard of review from the Administrative Procedure Act abuse of discretion.

I will also point out to my colleagues that the cost-benefit analysis is mandated by section 202.

So, again, I would feel better about all of this if we addressed the funding shortfall in the CFTC. We are not doing that. And I don't expect that this majority is going to work with us on that.

I also will insert in the Record, Mr. Speaker, a letter that was sent to all Members of the House from Americans for Financial Reform strongly opposing H.R. 2289. Let me just read the opening paragraph:

``On behalf of Americans for Financial Reform, we are writing to express our opposition to H.R. 2289. ..... This legislation would have a severe negative impact on the Commodity Futures Trading Commission and its ability to police commodity and derivatives markets. The new restrictions it places on the CFTC would require additional years of bureaucratic red tape prior to agency action, would enable numerous industry lawsuits against the agency, and would create inappropriate statutory restrictions on the agency's ability to properly oversee markets crucial to the financial system.''

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Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.

In closing, I want to call to the attention of my colleagues the Statement of Administration Policy on H.R. 2289 and just read a little bit of it so that my colleagues understand how strongly the administration is opposed to this:

``The administration strongly opposes the passage of H.R. 2289 because it undermines the efficient functioning of the Commodity Futures Trading Commission ..... by imposing a number of organizational and procedural changes that would undercut efforts taken by the CFTC over the last year to address end user concerns.

``H.R. 2289 also offers no solution to address the persistent inadequacy of the agency's funding. The CFTC is one of only two Federal financial regulators funded through annual discretionary appropriations, and the funding that Congress has provided for it over the past 5 years has failed to keep pace with the increasing complexity of the Nation's financial markets.

``The changes proposed in H.R. 2289 would hinder the ability of the CFTC to operate effectively, thereby threatening the financial security of the middle class by encouraging the same kind of risky, irresponsible behavior that led to the great recession.''

The statement concludes, Mr. Speaker:

``If the President were presented with H.R. 2289, his senior advisers would recommend that he veto the bill.''

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Mr. McGOVERN. I think that basically says it all.

While I respect the intentions of my colleagues who drafted this bill, I think it is a deeply flawed bill, and it creates hurdles for the CFTC that will not be fully funded and will cause all kinds of problems.

I think we ought to make sure that the CFTC can do its job. I don't want a repeat of the financial crisis that resulted in the Great Recession. And I think the American people don't want a repeat of that.

I get very worried when I see this Congress chipping away at Dodd-Frank and the provisions in Dodd-Frank that get us back to what got us into this mess to begin with. I think we can do a lot better.

I urge my colleagues to vote ``no'' on the rule and vote ``no'' on the underlying bill.

With that, I yield back the balance of my time.

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